F&C US Smaller Cos trounces benchmark

Although this investment trust has outperformed its benchmark, the Russell 2000 Index, over those periods it focuses on absolute as well as relative performance with the emphasis being firmly on capital growth, making positive returns over one, three and five years. Over shorter periods, however, the trust has underperformed its benchmark.

The trust's manager, Robert Siddles, is conservative in his stock selection, targeting companies which have a strong franchise, free cash flow and management who hold a stake in the business. He also has a well-diversified portfolio.

With a price discount to net asset value of more than four per cent, the fund is not as cheap as its historic average.

The types of companies Mr Siddles thinks may do well include those he expects to recover in the next year, such as metals producer Allegheny Technologies. A recent strong contributor has also been a recovery play, Premiere Global Services, which provides outsourced conference calling.

Under valued growth plays include companies involved in defence electronics such as thermal imaging specialist Flir and Orbital Sciences.

Mr Siddles is head of US Smaller Companies and also runs an open-ended fund focused on the same area. Before joining F&C in January 2001 he spent nine years at Gartmore Investment Management, the last five as head of US equities.

Full data for F&C US Smaller Companies is available here.

Source: Investors Chronicle, *F&C, **Morningstar.

Performance data as at 2 November 2010.

Top ten holdings as at 30 September 2010

Sector breakdown